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| Arian Simone, CEO, The Fearless Fund |
A panel on the U.S. Court of Appeals in Georgia ruled Monday that an Atlanta-based venture capital firm should be temporarily blocked from issuing $20,000 business start-up grants businesses owned by Black women, saying that doing so would probably discriminate against business owners of other races.
The Fearless Fund,a VC firm dedicated to funding businesses founded by women of color, led by CEO and founding partner Arian Simone, a FAMU graduate, had established the Fearless Strivers Grant Contest to provide financial support to underrepresented entrepreneurs. However, in an opinion released on Monday, the appellate court ruled that the program is "substantially likely to violate" Title 42 of the US Code, which ensures equal rights under the law and prohibits the use of race when awarding and enforcing contracts.
The court ordered a federal court in Georgia to enter a preliminary injunction, effectively halting the fund's grant application process while the case continues to be litigated. The ruling also stated that the fund's program is unlikely to be protected by the First Amendment.
In 2021, the FAMU Foundation, invested $150,000 into a venture capital fund.
Simone expressed her disappointment with the court's decision, calling it "devastating" and emphasizing the impact on young women of color. "I am shattered for every girl of color who has a dream but will grow up in a nation determined not to give her a shot to live it," Simone said. She also criticized the ruling as sending a message that diversity in corporate America and education should not exist.
The decision is seen as a victory for Edward Blum, an anti-affirmative action legal strategist who filed a lawsuit against the fund last August on behalf of his group, the American Alliance for Equal Rights. Blum, who was instrumental in the Supreme Court case that dismantled affirmative action in college admissions, expressed gratitude for the court's ruling.
However, Eleventh Circuit Judge Robin Rosenbaum dissented, arguing that Blum's lawsuit is akin to an athlete "flopping" on the field to draw a foul. She criticized the portrayal of the members' alleged injuries as nothing more than a legal ploy without genuine interest in participating in the contest.
The legal battle over the Fearless Fund's grant program is part of a larger trend of challenges to diversity, equity, and inclusion (DEI) programs in corporate America, schools, and higher education. Observers predict that the disagreement will continue to play out in the courts until there is a definitive ruling from the Supreme Court.
Given the current composition of the Supreme Court, there is a growing concern that race-based investment efforts could be banned or significantly curtailed. Black business leaders fear that such efforts to dismantle DEI programs could undo decades of progress toward leveling the playing field for Black and brown people.
The Fearless Fund's initiative was designed to address the underrepresentation of Black women in the business world, where there are few Black and women CEOs on the Fortune 500 list. As the legal saga continues, the broader implications for diversity and inclusion in the corporate sector remain uncertain.